Context
Perturbed by India’s reluctance to condemn the Russian invasion of Ukraine and keen to bind the country closer in confronting China, Western governments have launched a fresh push to wean India, the world’s biggest importer of arms, off its long dependence on Russian weaponry.
India’s concerns after Ukraine war
- India has grown increasingly alarmed about China, following deadly border clashes in 2020.
- Since the war in Ukraine began, it has also worried about Russia’s reliability as an arms supplier and about the quality of some of its weapons.
- Diversification away from Russia: India, though insistent that it has every right to choose its own suppliers, is already diversifying away from Russia.
- The share of weapons it imports from Russia has fallen sharply, to around 50% between 2016 and 2021, down from 70% during the previous five-year period.
- Western help for diversification: It has welcomed Western help in fulfilling its ambition to make more of its own weapons.
Joint arms production plan
- As the West cannot compete with Russia on price and remain reluctant to share their most cutting-edge technology, they are counting on joint arms production.
- Western leaders have been vocal about their willingness to help India arm itself.
- At a ministerial meeting in Washington in April, American officials discussed helping India to make advanced weapons, including reconnaissance aircraft and a system for combating aerial drones.
- On visits to Delhi that month, Boris Johnson, Britain’s prime minister, and Ursula von der Leyen, the European Commission’s president, also proposed joint arms ventures.
- Despite avowed interest from both sides, such a shift faces many challenges.
Challenges
- Dominance of PSUs: India’s arms industry, technically open to private investment since 2001, has long been hampered by the dominance of a small number of state-owned giants such as Hindustan Aeronautics Limited (HAL).
- Inefficiencies: State-owned arms-makers remain notoriously inefficient.
- They also retain long-running tie-ups with Russia, making Western governments wary of accepting India’s demands for the transfer of more advanced technology.
- Low presence of private sector: The share of defence production in the hands of the private sector, which is a more natural partner for big Western defence manufacturers, is about a fifth—scarcely higher than it was five years ago.
- Lack of industrial capacity and skill: Both the state and private sector still lack the industrial capacity and skilled workers to produce highly specialised defence technology at scale—especially military aircraft.
- Trust issue: While Western companies worry about inadvertent technology transfers to Russia, India worries about the reliability of its Western partners.
- Past record: Many see America, which in the past has imposed sanctions on India for its nuclear-weapons programme, as a fickle supplier.
- More recently America refused to sell India its Patriot missile system, prompting India to fall back on a Russian alternative and thereby put itself at risk of American sanctions once more.
Way forward
- Liberalisation of defence sector: As a step to liberalise the industry as part of his push towards self-reliance, in 2020 India raised the limit on foreign ownership of defence firms from 49% to 74%.
- Ordinance Factory Board was dissolved into small units to corporatize the entity.
- Lockheed Martin, a big American defence manufacturer, last year approved the manufacture of wings for the f-16 fighter jet by its joint venture with Tata.
- The company has also pledged to produce a more advanced fighter, the f-21, in India, provided it wins a multi-billion-dollar contract to supply 114 fighter jets.
- Big deals like those would provide incentives for foreign governments to approve more technology transfer and for Western manufacturers to make the investments needed to spur India’s indigenisation drive.
Conclusion
Russia’s war and China’s muscle-flexing have opened a door for India and the West to walk through, but crossing the threshold will require some resolve on both sides.
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